On September 27, Asia Carbon Industries announced plans to convert its three dry production lines located in Shanxi, China to specialty carbon black production lines. The project, which will be funded by cash from operations, is expected to begin on October 1, 2012 and finish in about three months at a total cost of approximately $4 million. Production will cease at the lines during the project.
The company expects that the specialty materials to be produced at the new facilities will generate significantly more revenues as a result of the higher sales prices. Specialty carbon black also has a broader range of uses as compared to the more traditional products; these include use as a pigmenting agent, UV stabilizer or conductive agent in a variety of products, such as plastics, toners and printing inks and coating, battery and electrical parts.
Each of the company’s dry production lines has an annual production capacity of 12,000 tons, operating at approximately 80% capacity, together the three dry production lines generate approximately $27 million revenue per year at the current price levels. Once the renovation has been completed, the production lines will each have an annual capacity of 6,000 tons, for a total of 18,000 tons of specialty carbon black per year. Projected revenue from specialty carbon black production at similar operating capacity is anticipated to be approximate $35 million annually.